Community Health Systems (CYH) Is Water-Logged And Getting Wetter Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Community Health Systems ( CYH) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Community Health Systems as such a stock due to the following factors:

  • CYH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $57.9 million.
  • CYH has traded 560,522 shares today.
  • CYH traded in a range 241.2% of the normal price range with a price range of $3.04.
  • CYH traded below its daily resistance level (quality: 53 days, meaning that the stock is crossing a resistance level set by the last 53 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on CYH:

Community Health Systems, Inc., together with its subsidiaries, provides general and specialized hospital healthcare services to patients in the United States. CYH has a PE ratio of 40.5. Currently there are 13 analysts that rate Community Health Systems a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Community Health Systems has been 1.4 million shares per day over the past 30 days. Community Health Systems has a market cap of $6.3 billion and is part of the health care sector and health services industry. The stock has a beta of 1.51 and a short float of 3.6% with 3.22 days to cover. Shares are down 0.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Community Health Systems as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • CYH's very impressive revenue growth greatly exceeded the industry average of 18.9%. Since the same quarter one year prior, revenues leaped by 54.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 257.1% when compared to the same quarter one year prior, rising from $28.00 million to $100.00 million.
  • Net operating cash flow has significantly increased by 50.70% to $976.00 million when compared to the same quarter last year. Despite an increase in cash flow, COMMUNITY HEALTH SYSTEMS INC's average is still marginally south of the industry average growth rate of 54.82%.
  • Powered by its strong earnings growth of 180.00% and other important driving factors, this stock has surged by 41.67% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • COMMUNITY HEALTH SYSTEMS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, COMMUNITY HEALTH SYSTEMS INC reported lower earnings of $1.25 versus $1.79 in the prior year. This year, the market expects an improvement in earnings ($3.82 versus $1.25).

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